Quick Tips on Effective Construction Quality ControlQuality control (QC) programs and reporting are not new to the construction industry. Engineers’ and owner’s specifications, and even manufacturers’ product data sheets, make clear what procedures must be followed and what records must be prepared to ensure that specified quality requirements are met or are within acceptable limits. Contractors are used to filling out QC reports to document environmental conditions, equipment operating parameters, and the work activities performed on site each day. The advancement of QC software and other technologies make it easier than ever to continuously monitor and record environmental, material, and other relevant conditions. Both contractors and owners should embrace the benefits associated with a top-notch QC program and diligent completion of QC reports, but they should be equally aware of the pitfalls that can arise when this aspect of a project is mismanaged and a legal dispute arises.

To resolve a dispute, lawyers must evaluate facts related to a project in terms of claims made by each side and the potential defenses and counter-arguments to those claims. If or when disputes arise on a project, the existence or absence of a QC program and QC reports (along with what is written or not written on them) can be compelling evidence that either helps or hurts your position. Although it is never the goal to end up in litigation or another dispute resolution proceeding because of your work on a project, it is helpful to consider whether your QC program would aid or damage your case in such a proceeding. Here are three points to always remember:

  • Your program on paper is only as good as your program in the field. A QC program that looks great on paper might do wonders to help you win a project. But that same program, if poorly implemented, can cost you thousands, or more, if it is not executed as intended. Put thought into your QC program. It is easy to establish a practice on paper because it is an owner requirement or necessary to obtain an industry certification. But if you are not able and willing to implement the requirement, what seemed like a gold star in your favor at bid time can damage your credibility and can be used to draw inferences against you in court. It is often worse to create a program or plan that says you will do something and not do it, than to never have said anything at all. Take time to review your QC program, and make sure you and your employees are executing your work in accordance with your program.
  • Train your employees well, train them often, and verify training effectiveness. Your program must be more than a commitment by the owners or upper management of the company. In fact, more than anything, it must be a daily commitment by your employees in the field. Train employees on the program, and set expectations for what it looks like to implement the program in the field. Think about the information that needs to be included on daily QC reports or in superintendent log books. Think about times when it makes just as much sense to record activities that did not happen on a given day as those activities that did and why. Be consistent with when and how you record this information. Remember, the absence of a record can be just as compelling as the existence of one in certain situations. Make sure your project managers review these documents regularly. If there is a problem in the reporting, you need to correct it as soon as possible. Make sure records are stored so they are easy to locate and review and protected from loss or damage. Finally, make sure you have a document retention policy in place (and that you follow it, as well).
  • Do not be afraid to call on legal counsel. Do not shy away from seeking guidance on the legal risks associated with your business or a project. I know, I know — no one ever wants to get lawyers involved, and you certainly do not want lawyers dictating how to run your businesses. But as the saying goes, an ounce of prevention is worth a pound of cure. The right lawyer can add value to your business and make you more profitable. Rational contractors do not want to litigate disputes. They would much rather do the job they contracted to do, get paid, and move on to the next project. Proactive clients who contact their legal counsel about issues that might arise in the future often come out ahead of clients who wait to call until there is a real mess and a lot of damage has already been done. Whether it is a QC program, a contract, or a safety issue, lean on the legal resources at your disposal. Engage your attorney to conduct a review of your programs or to present needs-based training to your team for legal perspective on discrete topics that affect your business.

 

The U.S. Court of Federal Claims (COFC), in Netcentrics Corp. v. United States, recently upheld an agency’s decision to disqualify an offeror from a procurement based on a perceived material misrepresentation in the offeror’s proposal about the availability of key personnel. In so holding, the COFC made clear that a material proposal misrepresentation may exist, even if there is no intent on the part of the offeror to deceive the agency.

As this author recently noted in a Law360 article about this noteworthy decision, multiple prior COFC decisions have stated that intent to make a false statement is a necessary element of a material proposal misrepresentation. The COFC’s decision in this particular case, however, is a noteworthy departure from those prior COFC decisions, but is generally consistent with the Government Accountability Office’s case law in this area, which holds that a material proposal misrepresentation (or “bait and switch”) may exist where the offeror either “knowingly or negligently” made a material misrepresentation in its proposal.

However, because COFC decisions are not necessarily binding on other COFC judges, it is still possible that another judge on the COFC could, in the future, hold that intent to make a misrepresentation in a proposal is, in fact, a necessary element of a material proposal misrepresentation.

Moreover, because of these diverging COFC decisions in this area, it is possible that the disqualified contractor will appeal the COFC’s decision in this case to the U.S. Court of Appeals for the Federal Circuit. If that were to happen, then any decision by the Federal Circuit on this particular issue would, in fact, be binding on all COFC judges, and thus would effectively be the last word on the issue.

 

For More Information

If you have any questions about this noteworthy development or any related issues, please do not hesitate to contact Aron Beezley.

OIG Report: SBA’s Administration of All Small Mentor-Protégé Program Falling ShortThe Small Business Administration (SBA) Office of Inspector General (OIG) recently issued a public report on the SBA’s All Small Mentor-Protégé Program (ASMPP), in which the SBA OIG found certain shortcomings in the SBA’s administration of the program. As discussed below, the report also provides a series of recommendations, most of which the SBA has accepted.

What is the ASMPP?

The SBA began accepting applications for the ASMPP in 2016 and has seen a surge in applications each subsequent year. Under the ASMPP, any small business – including 8(a) small businesses, Historically Underutilized Business Zone small businesses, veteran-owned and service-disabled veteran-owned small businesses, woman-owned and economically disadvantaged woman-owned small businesses – may enter into an agreement with a large business under which the large business will provide mentorship and assistance. In return, the large and small businesses are permitted to joint venture to perform federal small business set-aside contracts.

What did SBA OIG review?

According to the report, the SBA OIG’s “objectives were to determine whether the SBA implemented effective controls to ensure it conducted initial application reviews and annual evaluations in accordance with the [ASMPP] regulations and it measured success.” In order to “answer [these] objectives,” the SBA OIG “met with SBA officials to gain an understanding of the program structure and processes, and their perspectives on the challenges to the implementation of the program.” Further, the SBA OIG “selected and reviewed 12 mentor-protégé applications submitted from the inception of the program through August 1, 2018.”

What did SBA OIG find?

The report found that the SBA “did not implement effective controls to ensure it conducted initial application reviews and annual evaluations to fully align with program regulations.” In addition, the report found that the “SBA did not fully adhere to established processes or ensure it appropriately documented assessments.” Moreover, the report found that, “while SBA identified program performance indicators and a process to measure results, it did not effectively monitor and evaluate the results.” As such, the report found, the “SBA’s program may not be developing small businesses as it intended and unqualified businesses, including large businesses, may improperly benefit from the program.”

What did SBA OIG recommend?

Based on its findings, SBA OIG recommended that the SBA:

  1. Align its application and annual evaluation processes with program regulations;
  2. Take steps to adequately measure program success;
  3. Prioritize staff resources; and
  4. Improve the implementation of its program processes.

What was SBA’s response to the report?

In response to the report, “SBA management agreed with three recommendations but did not agree with one recommendation.” As a result, the SBA “plans to issue final standard operating procedures for the [ASMPP] that include steps to ensure that mentors are qualified to participate in the program.” Additionally, the SBA “will ensure that the standard operating procedures include steps on documenting completion of the application annual review processes.” Further, the SBA reports that it is “taking steps to fulfill functional requirements” for the ASMPP. The SBA, however, “did not reach resolution on recommendation 3” (i.e., prioritize staff resources).

Wait, I have more questions!

If you have any questions about this noteworthy development or any related issues, please do not hesitate to contact Aron Beezley or Eric Frechtel.